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Pharma, Biotech and How to Consider Investing In It

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The Valuentum analyst team digs deep into recent trends in big pharma and biotech from the lofty pricing of drugs to political and competitive pressures to ETF considerations and beyond. ~10 mins. If you cannot view the podcast below, please view the transcript below or select the link here. Tickerized for holdings in the XLV and IBB. Brian Nelson, CFA Gilead’s (GILD) hepatitis C regimen, almost a hundred thousand dollars. Vertex’s (VRTX) cystic fibrosis drug — hundreds of thousands of dollars per year. Have the drug companies lost their mind? This is Brian Nelson from Valuentum Securities, and today joining me is Mr. Kris Rosemann and Mr. Chris Araos — and we are going to talk everything healthcare, biotech… Mr. … Read more

Trouble Developing for Generic Pharma Stocks?

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Image Source: DonkeyHotey Shares of generic pharmaceutical stocks have been punished after news surfaced that the US Justice Department could file charges by year-end following a two year antitrust investigation. By Kris Rosemann Though difficult to say in light of the poor stock performance of generic pharmaceutical makers of late, we continue to be positive on the long-term secular theme of ongoing growth in the availability of low-priced drugs around the globe, a trend that plays favorably into their hands. Yet another regulatory-related blow, however, was dealt to the pharma space November 3, and surprisingly to those exact firms that work tirelessly to reduce the price of more expensive branded drugs, generic pharma. Reports surfaced that the US Justice Department … Read more

Big Pharma Round Up

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Though much has been made about the patent cliff—shorthand for the expiration of the patents of a large number of drugs over a short period of time—we continue to believe that pipelines across much of the pharmaceutical space are flush with new drugs and therapies. Readers may have an individual favorite or two (or three) within the space (and there’s nothing wrong with that), but we think one of the best ways for investors to play the strong pipelines across the healthcare sector—and ongoing consolidation—is through the Health Care Select SPDR ETF (XLV), a holding in the Best Ideas portfolio. The ETF boasts Johnson & Johnson (JNJ), Pfizer (PFE), Merck (MRK), Gilead Sciences (GILD), and AbbVie (ABBV) as its top … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Surveying Fourth Quarter Earnings at Health Care Firms

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The broader equity markets have been under pressure for much of January, and while it may be tempting to consider completely exiting stock investing for a time, we’re staying the course with both of our actively-managed portfolios. We had been expecting a contraction in price-to-earnings (P/E) multiples across the broader market (see our outlook here), and the performance thus far in 2014 has not been surprising. In case you may have missed it, I sent out some very important thoughts over the weekend to keep in mind as uncertainty and volatility increase through the course of 2014: Stay focused on @Valuentum portfolio holdings (best ideas), #asset allocation (cash) in portfolios and #prudence in allocating new capital. — Brian Nelson, CFA … Read more

Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more

Generic Pharmaceuticals: Patent Expiration and Low Global Utilization Rates Create Opportunities

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Key Takeaways: ·       The generic pharmaceutical industry will benefit from a patent expiry “mountain” in 2015. ·       Penetration and utilization rates of generics vary considerably by country. Japan, Italy, Spain, France, and Australia are most likely to see the greatest increases in generic penetration rates. ·       We expect further M&A activity in Japan, as global players seek to gain a generics stronghold in this under-penetrated, yet burgeoning pharmaceutical market. ·       Emerging market growth will offer significant opportunities for firms levered to Latin America and South Africa. ·       The potential for biosimilars remains a key catalyst for the group. ·       Ideas o       Teva Pharma (TEVA) is our favorite idea in the generics space thanks primarily to its upside valuation potential and global position. We’re particularly big fans … Read more

How to Think About Corporate Tax Reform

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Excited By COVID-19 Vaccine Candidates

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Image Shown: The race is on to find a cure, or better yet a vaccine, for COVID-19. Image Source: Pfizer Inc – First Quarter 2020 Earnings IR Presentation Key Takeaways The race for a COVID-19 cure and vaccine is rapidly evolving with a lot of exciting press releases being put forth. Gilead has taken the lead with a viable treatment, Sorrento is working toward a cure, and it seems most all of big pharma and biotech is racing to find a vaccine, from Johnson & Johnson to Sanofi/GSK and beyond. Though the evaluation of the full data set from a Phase 2 clinical trial means a lot more than the evaluation of a limited set of data from a Phase … Read more